EUR/USD Mid-Session Technical Analysis for January 3, 2022

The Euro is edging lower on Monday but inside Friday’s range, suggesting investor indecision and impending volatility. Although there are economic reports scheduled, the volume is still below average with both the Euro Zone and United States on bank holidays.

At 12:21 GMT, the EUR/USD is trading 1.1352, down 0.0020 or -0.18%. On Friday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $105.75, up $0.53 or +0.51%.

In economic news, manufacturing activity in the Euro Zone remained resilient at the end of 2021 as factories took advantage of an easing in supply chain bottlenecks and stocked up on raw materials at a record pace, a survey showed.

IHS Markit’s final manufacturing Purchasing Managers’ Index (PMI) dipped to 58.0 in December from November’s 58.4, matching an initial “flash” estimate and still comfortably above the 50 mark separating growth from contraction.

An index measuring output, which feeds into a composite PMI due on Wednesday and seen as a good guide to economic health, held steady at November’s 53.8.

In other news, a final reading of U.S. manufacturing PMI for December will be released at around 14:45 GMT on Monday, with construction spending figures for November scheduled to follow slightly later in the session.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up on Friday when buyers took out the previous main top at 1.1383. This took place during a thinly traded session so we’d like to see a follow-through move through 1.1386 to reaffirm the uptrend. A move through 1.1274 will change the main trend to down.

The new minor range is 1.1274 to 1.1386. Its 50% level or pivot at 1.1330 is potential support.

The major support is the long-term Fibonacci level at 1.1291.

On the upside, resistance is lined up at 1.1397 and 1.1439.

Daily Swing Chart Technical Analysis

The direction of the EUR/USD on Monday is likely to be determined by trader reaction to 1.1330.

Bullish Scenario

A sustained move over 1.1330 will indicate the presence of buyers. If this creates enough upside momentum then look for buyers to make a run at 1.1386.

Taking out 1.1386 will reaffirm the uptrend with 1.1397 the next likely target. This is a potential trigger point for an acceleration into 1.1439.

Bearish Scenario

A sustained move under 1.1330 will signal the presence of sellers. This could trigger an acceleration into 1.1291, followed by the main bottom at 1.1274. A trade through this level will change the main trend to down with 1.1235 to 1.1222 the next likely target zone.